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The Order of St. Benedict v. St. Paul Mercury Insurance Co.

United States District Court, D. Minnesota

April 24, 2017

The Order of St. Benedict, Plaintiff,
v.
St. Paul Mercury Insurance Company, et al., Defendants.

          Robert T. Stich, Esq., Stacey L. Sever, Esq. and Stich Angell Kreidler Dodge & Unke, P.A., counsel for plaintiff.

          Lance D. Meyer, Esq. and O'Meara Leer Wagner & Kohl, PA, counsel for defendants.

          ORDER

          David S. Doty, Judge United States District Court

         This matter is before the court pursuant to the court's sua sponte order to show cause and the motion for remand by plaintiff The Order of St. Benedict (Order). Based on a review of the file, record, and proceedings herein, and for the following reasons, the court denies the motion to remand and dismisses the case.

         BACKGROUND

         This insurance coverage dispute arises out of an underlying claim by Doe 312 that Father Tim Gillespie, a member of the Order, sexually abused him between 1989 and 1990. Doe 312 alleges that the defendants in the underlying case are liable for Gillespie's conduct under theories of nuisance, negligence, negligent supervision, and negligent retention. Defendant St. Paul Mercury Insurance Company (St. Paul) insured the Order under Policy No. CK06304393 from July 1, 1990, to July 1, 1991. Compl. ¶ 9. The policy provides commercial general liability coverage and umbrella liability coverage. Id. ¶¶ 10-16.

         On February 22, 2017, the Order commenced this lawsuit against St. Paul, The Church of St. Joseph, Doe 312, and Diocese of St. Cloud in Stearns County, Minnesota. The Order seeks a declaration that St. Paul has a duty to defend and indemnify it in the underlying case. The complaint does not assert any actual claims against The Church of St. Joseph, Doe 312, or Diocese of St. Cloud, nor does it seek relief against those defendants. On March 15, 2017, St. Paul removed the case to this court asserting, in part, that The Church of St. Joseph, Doe 312, and Diocese of St. Cloud are improperly named as defendants and should be realigned as plaintiffs, thereby creating diversity jurisdiction. ECF No. 1, at 3-4.

         Because this case appeared to be substantially similar to St. Paul Mercury Insurance Company v. The Order of St. Benedict, No. 15-cv-2617 (DSD/KMM), in which the court recently granted summary judgment to St. Paul, the court ordered plaintiff to show cause why: (1) The Church of St. Joseph, Doe 312, and Diocese of St. Cloud are properly joined as defendants in this matter, and (2) the case should not be dismissed based on the doctrines of res judicata or collateral estoppel or based on the court's reasoning in the order dismissing the prior related case.[1] In responding to the court's order, the Order moved to remand the case to Stearns County for lack of diversity jurisdiction.

         DISCUSSION

         I. Motion to Remand

         A claim may be removed to federal court “only if it could have been brought in federal court originally.” Peters v. Union Pac. R.R. Co., 80 F.3d 257, 260 (8th Cir. 1996). The removing party, as the party invoking jurisdiction, bears the burden of establishing by a preponderance of evidence that federal jurisdiction existed at the time of removal. See Pullman Co. v. Jenkins, 305 U.S. 534, 537-38 (1939); Missouri ex rel. Pemiscot Cty. v. W. Sur. Co., 51 F.3d 170, 173 (8th Cir. 1995). Jurisdiction under 28 U.S.C. § 1332 requires complete diversity of citizenship and a minimum amount in controversy in excess of $75, 000. “Complete diversity of citizenship exists where no defendant holds citizenship in the same state where any plaintiff holds citizenship.” OnePoint Sols., LLC v. Borchert, 486 F.3d 342, 346 (8th Cir. 2007).

         The Order argues that the court lacks jurisdiction over this case because it is a Minnesota citizen as are defendants Diocese of St. Cloud, The Church of St. Joseph, and Doe 312.[2] St. Paul concedes that complete diversity is lacking as the case is currently captioned but argues that the absent defendants should be realigned as plaintiffs because their interests match those of the Order.[3]

         In determining whether to realign the parties, the Eighth Circuit applies the “actual and substantial conflict” test. Alliance Energy Servs., LLC v. Kinder Morgan Cochin LLC, 80 F.Supp.3d 963, 972-73 (D. Minn. 2015) (quoting Universal Underwriters Ins. Co. v. Wagner, 367 F.2d 866, 870-71 (8th Cir. 1966)). Under that test the court must decide whether there is “any actual and substantial conflict existing between the parties as aligned.” Id. (internal quotation marks omitted). If such conflict exists, the court should not realign the parties. Id. In the insurance coverage context, this court has held that it is appropriate to realign the injured party to the side of the insured given their shared interest in the outcome of the coverage case. Interlachen Props., LLC v. State Auto Ins. Co., 136 F.Supp.3d 1061, 1071 (D. Minn. 2015); see also Garcia v. Century Surety Co., No. 14-3196, 2015 WL 1598069, at *2 (D. Colo. Apr. 7, 2015) (collecting cases and holding that “[f]ederal courts routinely realign the parties to place the injured third party on the same side of the caption as the tortfeasing insured, as against the insurer”); Home Ins. Co. of Ill. v. Adco Oil Co., 154 F.3d 739, 741 (7th Cir. 1998) (“[T]he normal alignment of parties in a suit seeking a declaratory judgment of non-coverage is Insurer versus Insured and Injured Party.”).

         Here, despite the Order's resistance to realignment, its own words ...


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